Department of Health and Human Services

Office of Inspector General -- AUDIT

"Review of Outpatient Pharmacy Services Provided by the News Milford Hospital for Fiscal Year Ending September 30, 1999, (A-01-00-00547)"

April 24, 2001

Complete Text of Report is available in PDF format (692 kb). Copies can also be obtained by contacting the Office of Public Affairs at 202-619-1343.


In Fiscal Year (FY) 1999, New Milford Hospital (Hospital) submitted for reimbursement about $1.2 million in charges for outpatient pharmacy services of $50 or more under revenue center code 250- Pharmacy. To determine whether controls were in place to ensure compliance with Medicare regulations, we reviewed the medical and billing records for a sample of 117 claims. Our analysis disclosed that the hospital did not establish or follow existing procedures for the proper billing of these services. As a result, certain charges did not meet Medicare criteria for reimbursement due to erroneous billings for medications used under conditions not covered by Medicare, medications not properly supported by medical records, and unallowable self­administered medications. Based on our statistical sample, we estimate that the Hospital overstated its FY 1999 Medicare outpatient pharmacy charges by at least $166,160. We recommended that the Hospital strengthen its procedures to ensure that charges for pharmacy services are covered and properly documented in accordance with Medicare regulations. We are also providing the results of our audit to Empire Medicare Services, the Hospital's Fiscal Intermediary, so that it can apply the appropriate adjustment of$166,160 to the Hospital's FY 1999 Medicare cost report. The Hospital agreed with our recommendations and indicated that it has implemented corrective action.